Dive Brief:
- The California Department of Resources Recycling and Recovery (CalRecycle) has told California Waste Solutions (CWS) that it must pay $12.1 million in restitution and more than $300,000 in fines over claims of fraudulent processing and other violations. CWS has disputed the claims and is working with the agency to clarify these issues.
- CalRecycle has also ordered Recycling Services Alliance (RSA) to pay $650,000 in restitution and $770,000 in penalties for alleged beverage container redemption fraud. The agency suspended the company's license and prohibited it from operating in the state's container redemption system at an informal hearing in May.
- RSA is suing CalRecycle on the ground that doing this at an informal hearing is unconstitutional and violates state law.
Dive Insight:
The main charge against CWS is that it filed claims over a three-year period seeking payment for containers that weren't processed in a certified facility. Other fines stem from charges of failing to report out-of-state materials. The company has said many of these issues will be cleared up through additional information that it plans to provide. Recently, CWS has also been indirectly involved with a complex lawsuit in Oakland over collection rates.
The RSA charges stem from claims that, during a brief period in Nov. 2015, RSA fabricated nearly 70 weight tickets to request $650,000 in state funds. This may have been due to a broken scale. RSA's attorney has pushed back against these claims, along with the company's certification suspension, and had strong words for CalRecycle.
"The big story is government officials closing down a business based on unproven allegations made by auditors with questionable qualifications," said attorney A. Sam Akintimoye in Resource Recycling.
These announcements are the latest in a string of recent efforts by CalRecycle to crack down on fraud in the state's recycling industry. As commodity prices remain low, many of California's redemption centers have closed and lawmakers are looking at revising the current payment formula to better reflect this new reality.
